(Business 2.0 Magazine) -
Amanda Congdon, 24, is running through the wintry streets of Manhattan in a purple cape and leotard. This may not seem like a milestone in Internet history, but it is: The perky actress is starring in the first commercial to be aired in a brand-new medium - the video blog, or vlog. Her silly superheroics are worth $40,000.

Congdon is the host of Rocketboom, a satirical news show and the most popular vlog on the Net. Despite having no budget, Rocketboom has 250,000 visitors a day, and that number is rising fast. Now Congdon and producer Andrew Baron are taking a cue from the ad-driven revenue of top bloggers: "We want to make a business out of vlogging," Congdon says.

With the proliferation of devices like the video iPod, the vlog boom is on. As of March there were more than 6,500 vlogs, says directory Mefeedia.com, compared with fewer than 300 a year earlier. Apple's (Research) iTunes store has offered vlogs for download as video podcasts since October, giving sites like Rocketboom a potential audience of 40 million iPod users.

And there's good news for vloggers who want to monetize their fame: Advertisers are getting more comfortable with online video spots. In the United States, Internet video ads brought in $225 million in 2005 and are expected to break the $1 billion mark in 2008, according to eMarketer, a New York research firm. "Vlogs are very targetable," says eMarketer analyst David Hallerman. "They're small, but they have a niche audience."

They also operate with amazingly low overhead. Baron, a former professor at Parsons school of design in New York, found Congdon through an ad on Craigslist. Now they write, shoot, and edit five new shows a week, each shorter than five minutes, in Baron's apartment. Increasingly, they rely on a team of freelance correspondents - Rocketboom fans - from around the world. "The show is just whatever we find interesting," Congdon says.

True to its unconventional style, Rocketboom auctioned off its first week of ads on eBay (Research). Bidders were warned that Rocketboom would have complete creative control over the spots. TRM, an ATM sales company based in Portland, Ore., won with a bid of $40,000. In exchange, Baron and Congdon shot and aired five 60-second spots featuring Congdon in two roles: an ATM sales rep in superhero garb, and a masked villain trying to blow up TRM.

According to TRM spokeswoman Janet Lennon, reaction inside the company was mixed. "It wasn't what we anticipated," she says. But TRM is still bullish on vlogs as a way to reach forward-thinking viewers. "We feel like this is an upcoming trend in marketing and advertising," Lennon says.

She could well be right. Not only did the commercials generate the biggest traffic spike in Rocketboom's short history, but EarthLink (Research) bought its own Rocketboom commercials shortly after the TRM deal. In addition, TiVo (Research) agreed to offer Rocketboom for free to a million broadband subscribers, hoping to use it to snare younger, hipper viewers. Baron and Congdon have other moneymaking plans in the works, such as offering subscriptions to special extended versions of the show for $4 a month.

Of course, Madison Avenue firms aren't lining up to buy ad space just yet. After all, this is a quirky, do-it-yourself medium where content ranges from the sublime to the unwatchable. "There isn't enough critical mass for us to go to a client and say, 'This is something that's going to work for you,'" says Charles Pinkerton, partner at New York-based Kirshenbaum Bond & Partners' the Media Kitchen.

That may change, however, as more vlogs boast viewership worthy of a mainstream TV show. Right now, the most popular vlogs include MobuzzTV, with a news format similar to Rocketboom's, and Tiki Bar TV, a sketch comedy series about the art of mixed drinks.

Says Steve Garfield, a veteran video producer who's organizing the second Vloggercon conference this summer in San Francisco, "People do this for artistic reasons, and for fun." Perhaps, but with sites like Rocketboom proving out the business model, you can bet that a lot of vloggers will soon be doing it for profit too.